How to Get Results from Your HR Transformation

By Dave Ulrich, Norm Smallwood, Alan Todd | November 3, 2020

Key Takeaways:

  • HR transformation underlies organization effectiveness.
  • Utilizing the Organization Guidance System, HR transformations shift from a descriptive approach to a prescriptive approach.

The crises of our day (global coronavirus pandemic, racial and civil unrest, global immigration, economic decline, political squabbles, and personal and emotional malaise) have accentuated the importance of human resource issues to help an organization succeed in the marketplace.

Numerous HR innovations in programs, processes, practices, and digital apps have occurred under the rubric of HR transformation. We believe it is time to offer guidance on the extent to which organization effectiveness initiatives in talent, capability, and leadership deliver results to employees, strategies, customers, investors, and communities. We have developed and offered a free Organization Guidance System (OGS) to guide the portfolio of these efforts.

HR transformation underlies organization effectiveness. We have written 13 books and 100’s of articles, collected data from over 100,000 respondents, offered hundreds of workshops, and consulted on how to deliver HR transformation. We have evolved the study of HR transformation into four stages of maturity and nine domains of action.

Figure 1 provides a comprehensive template for assessing overall HR Transformation along 9 domains for each of the 4 levels of maturity (36 cells overall).

Figure 1
HR Transformation:
4 Stages of HR Maturity Across 9 HR Domains
Domain Stages of HR Maturity
Essential Foundation Functional (best practice) Strategic Outside-In
HR Reputation

What is HR known for?

HR Compliance HR Functional Excellance Strategic HR HR Outside-In
HR Customers

Who are HR's customers?

We are employee champions We are advisors to managers We are strategists We are business proponents
HR Purpose

What is our HR mission? Why do we exist?

We exist to do the basics well We exist to design and deliver innovative HR practices We exist to partner with business leaders to help make strategy happen We exist to add business value that impacts external stakeholders
HR Design

How is the HR department organized?

HR is an efficient organization HR organizes to offer specialized solutions HR organizes to match the business organization HR organizes to build market value
Organization Capability

How does HR facilitate the right organization?

HR delivers organization role clarity HR delivers organization systems HR delivers organizational capabilities HR delivers ecosystem for external stakeholders
HR Analytics

How can HR use information to make better decisions?

HR Scorecards or Dashboards HR Predictive Analytics HR Strategic Interventions HR Guidance for Stakeholder Value
HR Practices

How do we create and deploy HR practices?

HR delivers essential work HR delivers leading edge practices HR delivers practices to enable strategy HR delivers HR solutions that benefit external stakeholders
HR Professionals

What HR professionals need to be, know, and do to be effective?

Trusted Operators Functional Experts Credible Partners Engaged Business Partners
HR Relationships

How does HR go about doing its work?

HR individual contributors HR team players HR as members of business teams HR stakeholder partners

Our point of view on HR Transformation is NOT limited to these 36 cells, but the extent to which the work in these 36 cells delivers results. We believe that describing what the maturity and activity of HR can be dramatically advanced by prescribing which of the stages of maturity and domains of activity should be focused on.

Report Guidance on Human Resource Transformation

After 18 months of creating an Organization Guidance System, we can now report how well companies perform on the four stages of maturity and nine domains of HR and the impact on results. Figure 2 reports pilot results (with a sample of 148 respondents) about the performance and impact of the four stages of HR maturity on four key results. This figure reports the overall mean (column A) of the four stages of maturity (with outside in being the lowest score) and the relative impact of each of the four stages (rows) on four outcomes we measured in the pilot (columns B, C, D, and E). We used proprietary analytics (variance decomposition) to understand how different levels of HR maturity (rows) will deliver different results (note: in the pilot, we focused on 4 results; we now have added a fifth, social citizenship).

The results from the Organization Guidance System are startling! First, we had assumed that foundational/essential HR work was not as critical for results as the strategic and outside in HR work. Our results show that doing HR foundational/essential work is critical to all results (green scales in columns B, C, D, E).

Figure 2
Stage of HR Maturity and Results
Level of Maturity A
Global Mean
(n=148)
B
Employee
C
Strategic / Business
D
Customer
E
Financial
Essential/Foundation 3.40 Very impactful on outcome Moderately impactful on outcome Very impactful on outcome Very impactful on outcome
Functional (best practice) 3.47 Slightly less impactful on outcome Not very impactful on outcome Not very impactful on outcome Slightly less impactful on outcome
Strategic 3.54 Impactful on outcome Less impactful on outcome Less impactful on outcome Not very impactful on outcome
Outside-In 2.95 Not very impactful on outcome Very impactful on outcome Moderately impactful on outcome Slightly impactful on outcome
Model R2   13.5 12.1 16.3 10.3

Second, we worked to understand these results and discovered in Figure 3 a very different view of the stage of HR maturity and results depending on who answered the survey. HR professionals saw an improved financial performance from doing essential/foundational work; while nonHR respondents (business leaders) see HR outside in as much more critical for financial performance. This dramatic difference in the perceived impact of HR stage and financial results may suggest that HR professionals and line managers see the impact of HR work differently.

Third, in Figures 2 and 3, we found that functional excellence (best practice) and strategic HR are highly correlated (r=.82) and neither focus delivers results that matter. It may be time to do less “best practice” or even “strategic” HR work and more focus on aligning HR to external stakeholders.

Figure 3
Financial Performance by Rater Background (HR vs. non-HR)
Stages of HR Maturity HR Other Leaders
Essential / Foundation Better Very Poor
Functional (best practice) Good Below Average
Strategic Worst Above Average
Outside-In Poor Best
Model R2 10.9 29

In Figure 4, we report the findings by the nine domains of HR activity. The results in Figure 4 are also striking as they inform the effectiveness of HR transformation. First, the attention on “HR organization” (#4) does not show much impact on any of the results. We still find that most “HR transformation” work obsesses on the HR design. This research shows that HR practices (#7) has the most impact on the results. Second, it is interesting that each result (column B, C, D, E) is shaped by different HR domains. We need to explore more why these results require different domains of HR transformation.

Figure 4
Nine Domains of HR Activity and Results
Domains of HR A
Global Mean
(n=148)
B
Employee
C
Strategic / Business
D
Customer
E
Financial
HR Reputation 3.00        
HR Customers 2.85        
HR Purpose 3.69        
HR Design 2.71        
Organization Capability 3.01        
HR Analytics 2.56        
HR Practices 2.62        
HR Professionals 3.22        
HR Relationships 2.84        
Model R2   10.5 16 10.5 6.5
Interested in learning more about our Organization Strategy & Transformation practice?

Implications

These findings from the Organization Guidance System dramatically shift the discussion of HR transformation from what is done to what should be done. While these findings are with a small pilot sample, the implications of this human resource guidance are profound. Rather than randomly create innovative HR initiatives, business and HR leaders can use the Organization Guidance System to receive rigorous guidance on where to focus for results.

Read the Organization Guidance System pilot results of the three other pathways: Talent, Organization Capabilities and Leadership.

Learn more about the Organization Guidance System and contact us to get started.

Dave has published over 30 books on leadership, organization, and human resources. These ideas have shaped these how people and organizations value to customers, investors, and communities. He has consulted and done research with over half of the Fortune 200 and worked in over 80 countries.  He has received numerous public recognitions and lifetime awards for his work. 

About the author

Norm Smallwood is a partner and co-founder of The RBL Group. His research and consulting focuses on helping organizations increase business value by building organization, leadership, and people capabilities that measurably impact market value. He has written extensively about leadership and organization effectiveness in eight books and over a hundred articles. 

About the author
The RBL Group

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